WASHINGTON, D.C. -- The Department of Justice announced today that it has joined a
lawsuit alleging that Columbia/HCA Healthcare Corporation and Quorum Health Group, two
national hospital chains, defrauded the Medicare program and other federally funded health
insurance programs. More than 200 hospitals in at least 37 states are defendants in the suit.

Assistant Attorney General of the Civil Division Frank W. Hunger and U.S. Attorney in
Tampa, Fla., Charles R. Wilson said the lawsuit, United States ex rel. Alderson v.
Columbia/HCA Healthcare Corporation et al., was unsealed today in U.S. District Court for the
Middle District of Florida. The suit alleges that Columbia/HCA and Quorum routinely submitted
false claims in their hospitals' cost reports to Medicare, Medicaid & CHAMPUS (the Civilian
Health and Medical Program of the Uniformed Services), in order to increase the amount of
reimbursement the government paid to the hospitals.

According to the complaint, beginning around 1984, Columbia/HCA and Quorum made
false statements to various fiscal intermediaries, the companies that process Medicare cost
reports for the government, in their annual cost reports, claiming that they should receive
reimbursement of costs that the hospitals knew were unallowable.

The lawsuit claims that Columbia/HCA and Quorum prepared "reserve cost reports,"
internal documents which included certain unallowable costs contained in their filed cost reports,
and kept those reserve cost reports hidden from government auditors. The lawsuit alleges that a
purpose of the reserve cost reports was for accounting purposes to reserve funds to repay the
government in the event the unallowable costs were eventually discovered by the government.

The suit was initially brought by James F. Alderson, a former employee of Quorum,
under the qui tam provisions of the False Claims Act, a federal law that allows private
individuals to sue on behalf of the government. The False Claims Act provides for treble
damages and civil penalties for violations of the act. In addition, the act provides that under
certain circumstances, a whistleblower can recover up to 15 to 25 percent of the government's
recovery in a case that the government joins.

Columbia/HCA owns approximately 330 hospitals in 35 states. More than 200 of those
hospitals are currently defendants in the suit by the relator. The suit alleges fraud in Medicare
cost reports of former HCA and HealthTrust hospitals, which continued after their acquisition by
Columbia/HCA. Quorum owns and manages more than 200 hospitals nationwide. In 1989,
HCA sold its subsidiary HCA Management to Quorum. Quorum Health Resources, a subsidiary
of Quorum also named in the lawsuit, is the nation's largest hospital management company.
Columbia/HCA and Quorum are Delaware corporations based in Nashville, Tenn.####